EGBs-GILTS CASH CLOSE: Bear Flattening Continues In Germany

The German curve bear flattened for the third consecutive session, with the UK's twist flattening Wednesday.

• 2Y German yields were the underperformer again, punctuated by a close on the session highs. 10Y UK and German yields peaked in early afternoon, with notable macro / cross-asset drivers few and far between.
• Periphery EGB spreads tightened as Greece held a successful 5Y GGB syndication and risk assets (notably equities) rallied throughout the session.
• Terminal ECB and BoE hike pricing rose very slightly on the day(2-3bp).
• ECB's Lane says under the bank's baseline scenario more hikes will be needed; Kazimir said hikes should continue, "maybe at a slower pace".
• The BoE FPC's minutes noted tighter credit conditions but resilient banks.
• BoE's Mann and ECB's Schnabel speak after the cash close.
• Data was again a sideshow (French consumer confidence was in line, UK lending/money supply data was on the strong-side), with attention firmly on Thursday's CPI releases.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 6.2bps at 2.654%, 5-Yr is up 4.8bps at 2.328%, 10-Yr is up 3.9bps at 2.329%, and 30-Yr is up 3.5bps at 2.408%.
• UK: The 2-Yr yield is up 4.8bps at 3.412%, 5-Yr is up 3.1bps at 3.316%, 10-Yr is up 1.6bps at 3.472%, and 30-Yr is down 3bps at 3.831%.
• Italian BTP spread down 2.7bps at 182.1bps / Spanish down 2.1bps at 101.6bps